Ten months into a yearlong effort to transfer control of Iraq’s reconstruction to the Iraqis, federal auditors say, the government there is spending very little of its own money on projects, while the process for handing off U.S.-funded work “appears to have broken down,” according to findings released Monday.

The fledgling Iraqi government, in power since May, has about $6 billion this year to devote to major rebuilding projects, representing about 20 percent of its overall budget. But auditors with the Special Inspector General for Iraq Reconstruction found that beyond paying employee salaries and administrative expenses, only a small amount of money is being spent on actual work. Auditors blamed “bureaucratic resistance within the Ministry of Finance, which traditionally has been slow to provide funds.”

Auditors also found fault with the way the Finance Ministry is keeping track of U.S.-built projects as they are handed over to the Iraqis and said some of the U.S. data on the subject are “incomplete or inaccurate.”

The findings speak to the difficult path that lies ahead as the United States attempts to turn over a decidedly incomplete reconstruction effort to an Iraqi government that remains beset by corruption and has had huge problems exercising authority amid rising violence.

At the beginning of the year, Inspector General Stuart Bowen labeled 2006 “the year of transition” as the U.S. winds up its dominant role in the reconstruction. But in Monday’s report, his office said the year is already into its fourth quarter and the transition remains “fraught with challenge.”

Among the obstacles: a “deteriorating security situation across Iraq,” pervasive corruption in Iraqi ministries and possible problems raising funds from international donors unless the Iraqi government can prove it is willing to spend the money it already has on roads, health clinics, power plants and other much-needed infrastructure.

“I don’t think the Iraqi government is prepared to take over the reconstruction,” said Sen. Susan Collins, R-Maine, who has been overseeing the U.S.-led effort as chairman of the Homeland Security and Governmental Affairs Committee. “But I don’t know that continuing to pour our money and manpower into these projects is the answer, either.”

The United States has devoted more than $38 billion to relief and reconstruction in Iraq since the 2003 invasion, and Monday’s report does point to some successes. Electric capacity nationwide passed prewar levels in recent months, though in Baghdad it remains lower than before the war. Oil exports, at 1.66 million barrels a day, met Iraqi goals.

Overall, 88 percent of U.S. projects had been completed, with only a small minority yet to begin. About three-quarters of the $18 billion reconstruction package Congress passed in November 2003 has been spent.

In some areas, however, results have fallen well short of expectations. Just six of 142 U.S.-funded primary health clinics are operational.

In the past week, Bowen’s office has exposed new problems. Auditors found, for instance, that on some of the biggest contracts with major U.S. firms, anywhere from a third to more than half of the costs were administrative overhead.

Bowen’s office is slated to close on Oct. 1 next year. But Collins said Monday that she is working with members of both parties to keep it open longer so it can continue overseeing the reconstruction. “I think it’s a huge mistake to prematurely terminate the special inspector general’s office,” she said.